Opinion
No. 5:01-CV-211BN
May 17, 2002
OPINION AND ORDER
Before the Court are the Motions of Plaintiff for Relief from Judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, and for Amendment of the Court's Opinion and Order of March 6, 2002, so that Plaintiff may seek interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Having considered the Motions, Responses, attachments to each, and supporting and opposing authority, the Court finds that the Motions of Plaintiff are not well taken and should be denied.
I. Background and Procedural History
On April 6, 2000, Plaintiff filed suit in the Circuit Court of Jefferson County, Mississippi, alleging that Defendants, including numerous non-diverse "local retailers" that sold, produced, manufactured, marketed and sold lead-based paint and/or certain components of lead-based paint as fit for use as a paint on or in schools and other structures owned by Plaintiff and that Defendants knew that their products were not fit for such use. Plaintiff asserted causes of action for, among other things, strict liability, restitution, negligence, fraudulent and negligent misrepresentation, conspiracy, and public nuisance. The action was timely removed to this Court by Defendants pursuant to 28 U.S.C. § 1446(a), on ground that the non-diverse defendants had been fraudulently joined and that the Court therefore had subject matter jurisdiction over the case under 28 U.S.C. § 1332(a). On motion of the Plaintiff to remand, the Court issued an Opinion and Order on March 6, 2002, in which the Court found that the non-diverse defendants ("Local Retailers") had been fraudulently joined and denied remand. On April 8, 2002, Plaintiff filed the instant Motion, which Plaintiff amended on April 11, 2002, and which the Court here considers.
II. Analysis
As a preliminary matter, the Court notes that Defendant Lead Industries Association, Inc. ("Lead Industries"), filed a Suggestion of Bankruptcy on April 5, 2002. Therefore, pursuant to section 362 of the United States Bankruptcy Code, all proceedings, including the instant action, were automatically stayed as to Lead Industries on March 29, 2002, the date on which Lead Industries filed its Chapter 7 Petition for bankruptcy. See 11 U.S.C. § 362(a)(1) (providing that, upon the filing of a petition in bankruptcy any judicial "proceeding against the debtor" is automatically stayed). The purposes of the automatic stay are to "protect the debtor's assets, provide temporary relief from creditors, and further equity of distribution among the creditors by forestalling a race to the courthouse." GATX Aircraft Corp. v. Leigh, 768 F.2d 711, 715 (5th Cir. 1985) (citing Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983)). However, the United States Court of Appeals for the Fifth Circuit has held that "the automatic stay does not divest all other courts of jurisdiction to hear every claim that is in any way related to the bankruptcy proceeding" and that the Court "retain[s] jurisdiction to determine the applicability of the stay to litigation pending before [it], and to enter orders not inconsistent with the terms of the stay."See Arnold v. Garlock Inc., 2002 U.S. App. LEXIS 6564, *3 (5th Cir. April 9, 2002) (citing Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir. 1990)). As the instant Motions for Relief from Judgment and for Interlocutory Appeal are not well taken and will be denied, the Court finds that the Opinion and Order entered this day will not affect the assets of Defendant Lead Industries or otherwise interfere with the protections afforded it by section 362, and is therefore not inconsistent with the terms of the automatic stay. Accordingly, the Court finds that it has jurisdiction to consider and rule upon the instant motions of Plaintiff.
The petition for bankruptcy filed by Defendant Lead Industries also serves as an independent ground upon which this Court may exercise subject matter jurisdiction. See 28 U.S.C. § 1334 (b) (providing that a federal court has original, but not exclusive jurisdiction over "civil proceedings . . . related to a case under title 11). See also Allen v. City Fin. Co., 224 B.R. 347, 351 (S.D. Miss. 1998) (citations omitted)
The bankruptcy of Defendant Lead Industries also serves as an independent ground upon which this Court may exercise subject matter jurisdiction. See 28 U.S.C. § 1334(b).
With its Motion for "Reconsideration," Plaintiff urges the Court to vacate its Opinion and Order of March 6, 2002, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, on grounds that: (1) in denying the Motion of Plaintiff to Remand, the Court erred by focusing on the merits of the case and applying an incorrect standard to determine fraudulent joinder, (2) the Court overlooked significant and substantial evidence supporting remand, and (3) new evidence submitted by Plaintiff mandates reconsideration and remand of the case. Thus, Plaintiff seeks relief pursuant to subsections 60(b)(2) (6), which provide in pertinent part:
On motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding for the following reasons: (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); 6) any other reason justifying relief from the operation of the judgment.
FED.R.Civ.P. 60(b). A district court considers the following factors when addressing motion brought pursuant to Rule 60(b):
(1) that final judgments should not lightly be disturbed; (2) that the Rule 60(b) motion is not to be used as a substitute for appeal; (3) that the rule should be liberally construed in order to achieve substantial justice; (4) whether the motion was made within a reasonable time; (5) whether — if the judgment was a default. (6) whether — if the judgment was rendered after trial on the merits — the movant had a fair opportunity to present his claim or defense; (7) whether there are intervening equities that would make it inequitable to grant relief; and (8) any other factors relative to the justice of the judgment under attack.Stewart v. Jones, 946 F. Supp. 466, 469 (S.D. Miss. 1996) (citingSeven Elves v. Eskenazi, 635 F.2d 396, 401 (5th Cir. 1981)).
In its Order and Opinion of March 6, 2002, the Court framed the issue before the Court as "[w]hether there is arguably a reasonable basis for predicting that Plaintiff may prevail on the merits against Local Retailers." Order and Opinion of March 6, 2002, at 9 (emphasis added). The Court went on to state that, if there was a reasonable basis for so predicting, "the Defendants have failed to demonstrate fraudulent joinder and the case must be remanded to state court." See id. The Court ultimately found that, as each of the claims of Plaintiff was predicated upon a sale of lead-based paint and as Plaintiff had presented no evidence that it had ever purchased lead-based paint from the local retail Defendants, "Defendants had satisfied their burden of showing that Plaintiff cannot prevail on its claims against them." Based on these statements of the Court, Plaintiff argues that the Court applied an incorrect standard to determine fraudulent joinder and seeks relief from the Order of March 6, 2002, pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure and remand the case to state court from whence it was removed.
The Court first notes that the Plaintiff is correct in its contention that, in determining whether non-diverse defendants were fraudulently joined, a district court "do[es] not decide whether the plaintiff will actually or even probably prevail on the merits, but look only for a possibility that he may do so." Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992) (citations omitted). Rather, a district court, after resolving all disputed questions of fact and ambiguities of law in favor of the non removing party, must determine whether there is "arguably a reasonable basis for predicting that the state law might impose liability on the facts involved." Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993). If so, the court must find that the non-diverse defendant was not fraudulently joined and that there is no basis for asserting diversity of citizenship jurisdiction. See id. This holding of the United States Court of Appeals for the Fifth Circuit inJernigan was quoted by the Court in its Opinion and Order of March 6, 2002, and was the standard applied by the Court in its determination that the Local Retailers had been fraudulently joined. That the Court inartfully used the term "prevail in its statement of the central issue in the case does not mean, as Plaintiff contends with the instant Motion, that the Court "conduct[ed] a full evidentiary hearing on questions of fact." To the contrary, the Court found that, as Plaintiff had presented no evidence with regard to whether it had purchased lead-based paint from any of the Local Retailers named as Defendants in the case, that there was no factual dispute to resolve in favor of Plaintiffs. Based on this finding, and having stated that "[w]ithout evidence of . . . a sale [of lead-based paint to Plaintiff] by a Local Retailer, the Court could not] find that there [was] arguably a reasonable basis for predicting that the state law might impose liability on the facts involved," see Opinion and Order of March 3, 2002, at 14, the Court found, again inartfully using the term "prevail," that Defendants had satisfied their burden of proving fraudulent joinder. That is, there was no possibility that Plaintiff could recover on its claims against the Local Retailers. Therefore, the Court finds that, in spite of its use of the word "prevail," it did not err in either its interpretation of the law with regard to fraudulent joinder, or in its application of the law to the facts of the case sub judice. Accordingly, the Court finds that the Motion of Plaintiff for Relief from Judgment pursuant to Rule 60(b)6) of the Federal Rules of Civil Procedure on ground that the Court applied an incorrect standard to determine fraudulent joinder, is not well taken and should be denied.
Plaintiff also seeks relief from the Opinion and Order of March 6, 2002, pursuant to subsection 60(b)(6). "To succeed on a motion brought under 60(b)(2) based on newly discovered evidence, the movant must demonstrate (1) that it exercised due diligence in obtaining the information and (2) `the evidence is material and controlling and clearly would have produced a different result if presented before the original judgment.'" Government Fin. Servs. v. Peyton Place, 62 F.3d 767, 771 (5th Cir. 1995) (quoting New Hampshire Ins. Co. v. Martech USA, Inc., 993 F.2d 1195, 1200-01 (5th Cir. 1993)). The "newly discovered evidence" submitted by Plaintiff includes: (1) newspaper advertisements by Local Retailer Feltus Brothers, which were placed in the Natchez Democrat on April 17, 1952, and March 21, 1958, and which tout new and improved formulas of Glidden and Climatic house paint; (2) answers submitted by The Glidden Co., in response to interrogatories propounded in a Texas case brought by the Spring Branch Independent School District; (3) an affidavit by Peter Reich, an expert witness of Plaintiff whose opinion the Court considered in its Opinion and Order of March 6, 2002; and, (4) two opinions and orders of the United States District Court for the Southern District of Mississippi, Western Division, issued by Judge David Bramlette, in which the court, upon reconsideration pursuant to Rule 59 of the Federal Rules of Civil Procedure, found remand to be proper based on its determinations that the court had overlooked evidence tending to show that the non-diverse defendants were not fraudulently joined. The Court finds that, as Plaintiff does not argue, or in any way attempt to demonstrate, that it exercised due diligence in obtaining the newspaper advertisements, answers of The Glidden Co., and affidavit of Peter Reich, this evidence submitted by Plaintiff and on which the instant Motion is based is not "newly discovered evidence" and will therefore not be considered. The Court further finds that, even if the subject advertisements, answers and affidavit constituted "new evidence" for the purposes of a motion brought pursuant to Rule 60(b)(2), Plaintiff has not shown that this evidence is either controlling or would have clearly produced a different result if presented in conjunction with the Motion to Remand. See Peyton Place, 62 F.3d at 771.
As for the opinions and orders of Judge Bramlette submitted by Plaintiff for the Court's consideration, the Court finds them to be distinguishable factually from the case sub judice. With each of the opinions and orders, Judge Bramlette found that, based on evidence that lead-based paint had been sold to a plaintiff or a plaintiff's agent by a non-diverse defendant, the case should be remanded for lack of subject matter jurisdiction. Plaintiff in the case sub judice did not produce any evidence — affidavit, deposition or otherwise — that it had ever bought lead-based paint from a Local Retailer for use on or in a school or other structure owned by Plaintiff. As each of the claims asserted by Plaintiff against Local Retailers was predicated on a sale of lead-based paint, the allegations of Plaintiffs amount to pure speculation, and as such, do not state a claim. See Peters v. Metropolitan Life Ins. Co., 164 F. Supp.2d 830, 834 (S.D. Miss. 2001) (Bramlette, J.) (holding that allegations against non-diverse defendants "must be factual, not conclusory, because conclusory allegations do not state a claim"). Accordingly, the Court finds that the Motion of Plaintiff for Relief from Judgment pursuant to Rule 60(b)(2) of the Federal Rules of Civil Procedure is not well taken and should be denied.
Plaintiff also urges the Court amend its Opinion and Order of March 6, 2002, to include language so that it can seek an interlocutory appeal pursuant to section 1292, which provides in pertinent part:
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order.28 U.S.C. § 1292(b). The statute further provides that the court of appeals may permit an appeal of such an order. Id. Rule 5(a) of the Federal Rules of Appellate Procedure allows a district court to amend an order to meet the requirement that the order being appealed contain a statement certifying the appealability of the order. See Advisory Committee Notes to the 1967 and 1998 Amendments.
Plaintiff argues that an interlocutory appeal is warranted because the Court "applied a standard different from other courts and well-established law." See Memorandum of Plaintiff in Support of Motion. The Court does not agree. As previously stated, the Court found, albeit inartfully, that no arguably reasonable basis exists for predicting that the state law might impose liability. This is the standard to which the Court is bound by Fifth Circuit precedent to determine whether a defendant was fraudulently joined. See Jernigan, 989 F.2d 812, 815 (5th cir. 1993). Nor did the Court inappropriately shift the burden of proof to Plaintiff. The Fifth Circuit has held that the Court should "pierce the pleadings" and consider "summary judgment-type evidence" when considering whether a non-diverse defendant has been fraudulently joined to defeat diversity jurisdiction, see LeJeune v. Shell Oil Co., 950 F.2d 267, 271 (5th Cir. 1992), and, "in the absence of any proof, [should not] assume that the nonmoving party could or would prove the necessary facts" to support his claims against the non-diverse defendant. Badon v. RJR Nabisco, Inc., 224 F.3d 382, 392-93 (5th Cir. 2000) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)). The Court therefore finds that the Opinion and Order denying the Motion to Plaintiff to Remand does not involve "controlling question[s] of law as to which there is substantial ground for difference of opinion. . . ." 28 U.S.C. § 1292(b). Accordingly, the Court finds that the Motion of Plaintiff to Amend is not well taken and should be denied.
III. Conclusion
IT IS THEREFORE ORDERED that, having previously found, and here reaffirmed, that the non-diverse parties named as Defendants in this case were fraudulently joined, the following Defendants are hereby dismissed with prejudice:
The Sherwin-Williams Company (MS);
Alexander Hardware Company, Inc.;
Benjamin Moore Paints;
Claiborne Hardware, Inc.;
Concordia Contracting Company, Inc.;
Darsey Hardware Co.;
Darsey Hardware Furniture Company;
Devoe Company, Inc.;
Farmers Gin Supply Co., Inc.;
Feltus Brothers, Ltd.;
Frierson Building Supply Company;
Glidden Company (MS);
Hirsch's Store;
Hootsell Lumber Supply Company, Inc.,
Hudson's Incorporated;
Hudson Salvage, Inc.;
Lane Hardware, Inc.;
Mac's Building Supply;
Mid South Lumber © Street);
Mid South Lumber, Inc. (Constitution Avenue);
Mississippi Hardware Company;
Phillips Building Supply of Laurel, Inc. (Highway 15);
Phillips Building Supply of Laurel, Inc. (North Meridian);
Seabrook Corporation;
Seabrook Paint Co. of Mississippi;
Tyson Lumber Co., of Natchez; and
Vicksburg Materials, Inc.
IT IS FURTHER ORDERED that the following motions of Defendants are hereby denied as moot:
Motion of Defendant Mississippi Hardware Company to Dismiss [91-1];
Motion of Defendant Seabrook Paint Co. of Mississippi to Dismiss [92-1];
Motion of Defendant Hirsch's Store to Dismiss [109-1];
Motion of Defendant Hirsch's Store for More Definite Statement [109-2];
Motions of Defendant Lane Hardware, Inc., to Dismiss [111-1 123-1];
Motion of Defendant Claiborne Hardware to Dismiss [127- 1]; and,
Motion of Defendant Phillips Building Supply of Laurel, Inc. (North Meridian) to Dismiss [131-1].
IT IS FURTHER ORDERED that all proceedings in this case are hereby stayed as to Defendant Lead Industries Association, Inc.
IT IS FURTHER ORDERED that all parties shall file by May 24, 2002, a memorandum as to whether this matter should proceed as to the other Defendants.
IT IS FURTHER ORDERED that the Motion of Plaintiff to Reconsider [128-1 129-1] is hereby denied.
IT IS FURTHER ORDERED that the Motion of Plaintiff to Certify Order of March 6, 2002, for Interlocutory Appeal [128-2 129-2] is hereby denied.